U.S. consults oil experts as it weighs action against Syria

WASHINGTON, Aug 29 (Reuters) - Obama administrationofficials have contacted energy experts in recent days todiscuss oil market conditions as the president weighs a militarystrike against Syria, sources familiar with the matter toldReuters.

There are no signs the government is preparing to tapemergency oil reserves soon in a bid to tame rising prices,according to the sources who spoke with Reuters this week,though the administration is closely monitoring the situation.

Fears about Syria's civil war spilling over into othercountries have helped propel international oil prices to theirhighest level in six months, rising more than $8 a barrel sincethe beginning of the month, and approaching a level that hasslowed the global economy in the past.

That has spurred early market chatter about whether Obamamight tap the Strategic Petroleum Reserve, or SPR, a 700 millionbarrel resource last used in 2011 after months of supplydisruptions during the Arab Spring.

"I don't think a use of the SPR is either imminent or beingstrongly considered at this time," said one source who hadspoken with administration officials as part of regulardiscussions with them about oil markets.

"It probably wouldn't be unless the blowback from anystrikes on Syria is more severe than anticipated," the sourcesaid.

Oil analysts have said a quick strike against Syria couldpush prices up to $125 to $130 a barrel, with Societe Generalesaying prices could reach $150 a barrel if the crisis were tospill over into larger oil producing countries.

Energy markets are already nervous because of major supplydisruptions in Libya, where armed groups and labor strikes havecaused crude exports to be cut to their lowest level since the2011 civil war.

A UK official also said a strategic oil release, which wouldbe coordinated by the International Energy Agency (IEA), was noton the radar in London, despite elevated oil prices.

The Paris-based IEA, with which the Obama administrationcoordinated on a sale of 60 million barrels of U.S. and Europeanreserves in 2011, said on Thursday the rise in oil prices thismonth does not call for a response, but that the agency standsready to respond, "in the event of a major supply disruption."

NOT IMMUNE FROM SPIKES

President Barack Obama has made it clear that he plans tohold the Syrian government responsible for a chemical weaponsattack last week that killed hundreds of civilians in a Damascussuburb. A missile strike is among the options being consideredby the Obama administration.

"I have no interest in any open-ended conflict in Syria, butwe do have to make sure that when countries break internationalnorms on weapons like chemical weapons that could threaten us,that they are held accountable," Obama told PBS Newshour in aninterview on Wednesday.

Even though the United States is in the midst of its biggestoil drilling boom in decades, with production at the highestlevel since 1997, prices would still likely spike if there was amajor supply disruption in the Middle East.

The North Sea Brent crude benchmark that helps setthe majority of world oil prices traded around $114 per barrelon Thursday, near the $120 level that analysts say could pushthe White House to begin considering using the SPR.

An administration official, speaking on background, declinedto comment specifically on how closely it was watching oilprices.

"We are continuously monitoring the global oil supply anddemand situation," the official said.

READY TO RESPOND

Syria has not exported any oil since late 2011, wheninternational sanctions came into force. Prior to the sanctionsSyria produced 370,000 barrels per day (bpd), roughly 0.4percent of global supplies, and exported less than 150,000 bpd,mainly to Europe.

But there are concerns that a U.S. strike could cause theLebanese militant group Hezbollah, which is backed by Iran andhas been involved in fighting in Syria, to carry out retaliatoryattacks in Turkey, Jordan, or oil-producing Iraq.

One of the sources who has spoken with U.S. officials saidthere is a concern that Iran, which has supported SyrianPresident Bashar al-Assad, may walk away from talks on itsdisputed nuclear program.

The unpredictability of what action the United States willtake, and what happens afterwards, has helped push marketshigher, said Charles Ebinger, head of the energy securityinitiative at the Brookings Institution.

Ebinger said he had not heard anyone in Washington talkingseriously about tapping strategic reserves, but he said thatcould change quickly if a price jump of $15 to $20 a barrelthreatened to stall the economic recovery.

"I'm sure if the market got too jittery, we'd try to do it,"he said.

(Additional reporting by Matthew Robinson and Joshua Schneyerin New York and Peg Mackey in London; Editing by Toni Reinhold)